Outsourcing Jetliner Production

♠ Posted by Emmanuel in at 7/31/2007 03:55:00 PM
Fortune Small Business has a good 'un on how the jetliner titans Boeing and Airbus are increasingly "outsourcing" aircraft component design and manufacture to other firms. In the case of Boeing, it's being frequently farmed out or devolved to smaller firms that may be able to perform R&D tasks quicker--hence the article appearing in Fortune Small Business. The focus of the article is on the hugely successful rollout of the Boeing Dreamliner 787, which so far has clobbered Airbus in terms of order book entries with some help from a faster promised delivery time compared to Airbus's A350 which has had comparatively few takers...
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Chinese Officials' Green Promotion

♠ Posted by Emmanuel in , at 7/31/2007 03:45:00 PM
Coming nearly at the same time as the news that China intends to restrict credit to enterprises that repeatedly flout environmental regulations is this bit of information which suggests the promotion track of apparatchiks will be modified. Previously, efforts to curb pollution met resistance among local officials, for promotion was based on achieving economic growth targets. This did not sit very well with containing investment in heavily polluting industries in many instances. Local government officials were not really incentivized to shoo away smokestack enterprises that could boost growth despite damaging the environment. When faced with a choice between investment and the environment, the former usually won regardless of pollution mandates.China Daily now mentions that the career ladder of the Communist Party faithful will be shifted to meeting pollution control targets instead of focusing mostly on growth targets. It's news that again sounds good on paper. As always, though,...
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China: no Pollution Control, no Credit

♠ Posted by Emmanuel in , at 7/31/2007 03:35:00 PM
Chinese officials are taking a new approach to attacking China's mounting environmental woes caused by rapid industrialization. To me it makes sense, at least on paper: enterprises that continually flout environmental regulations are to be denied access to credit. Of course, implementing this new scheme is an entirely different challenge. First, just how stringent are these environmental regulations? Second, are increasingly independent, growth target-minded local governments really going to allow these regulations to be implemented? Third, just how tightly will access to credit be squeezed by banks and other financial service...
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Attack of the SWFs

♠ Posted by Emmanuel in at 7/30/2007 02:11:00 PM
Purportedly, sovereign wealth funds (SWFs) are becoming more aggressive in their operations according to the Wall Street Journal. This article provides a good backgrounder on SWFs in operation. Particularly interesting is the backlash against them in the home countries of target firms:Foreign governments, flush with cash and no longer content with the meager returns to be had on safe but low-yielding investments like Treasurys, are becoming increasingly aggressive players on the equity front.The new boldness of these government-controlled investors was on display Sunday night when entities controlled by the governments of China and Singapore agreed to invest as much as $18.5 billion in return for stakes in the big British bank Barclays PLC.In doing so, Chinese lender China Development Bank and Temasek Holdings Pte. Ltd., the Singapore government's investment agency, could play a role in the outcome of the biggest bank-takeover battle ever. That increasingly bitter contest pits...
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Genetically Modified Organisms

♠ Posted by Emmanuel in at 7/30/2007 01:35:00 PM
The next frontier for biotech appears to be in flogging genetically modified organisms for food production. Although genetically modified foods in the form of grains and vegetables have generally proven acceptable Stateside--or at least Americans don't express so much disapproval of it unlike, say, the Europeans--modifying animals may be a trickier proposition as it involves, ah, livestock. Hence, growing activity in this space is hinged on regulatory approval of such foods Stateside. Strangely enough, this nascent industry is seeking more regulation to ensure consumer confidence. Again, I don't think Europeans will be so open to this latest edition of "Frankenfoods." However, I think Americans will be more accepting, or at least indifferent to the introduction of GMOs. From the International Herald Tribune:This little piggy's manure causes less pollution. This little piggy produces extra milk for her babies. And this little piggy makes fatty acids normally found in fish, so...
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Stupid Executive Tricks

♠ Posted by Emmanuel in at 7/29/2007 11:25:00 AM
We can talk about corporate social responsibility (CSR) all day, but apparently some executives are still keen on extracting superior rents through means on the foul side of acceptable behavior. First is this item highlighting that executives who shower favors on stock analysts are more likely to get favorable ratings for their firms. Favors were more frequently offered as earnings performance failed to meet expectations set by the Street. While this point may seem obvious, the empirical research that has gone into making this conclusion appears quite substantive. From the Financial Times:US executives have been able to secure more favourable research ratings for their companies from investment banks by bestowing professional favours on Wall Street analysts, according to new academic research to be published on Friday. The study found that by offering analysts favours, ranging from recommending them for a job to agreeing to speak to their clients, executives sharply reduced...
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PIMCO's Bill Gross, Populist

♠ Posted by Emmanuel in at 7/27/2007 03:20:00 PM
Color me skeptical when the manager of the world's largest bond fund strikes a populist pose. Yet here it is, PIMCO's Bill Gross railing against private equity and hedge fund operators while bemoaning growing inequality Stateside. (If i didn't know better I'd have thought that he was running for office as a Democrat.) I can't exactly say Bill Gross is doing poorly as recent global jitters over loose money have sent investors back to bond-landia. Gross even calls for more government action in the form of equitable taxation to level the playing field. Despite his exalted status as one of if not the world's premier bond trader,...
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China: IP Pirates Hard to Control

♠ Posted by Emmanuel in at 7/27/2007 03:00:00 PM
Entertainment news publication Variety notes that the Chinese government is once again asking for some leniency over current US efforts [1, 2] to obtain stronger IP compliance from China in the WTO. China claims that production lines are being smuggled into the country [!] by local gangs [!!] who often operate from caves [!!!] It sounds a bit too James Bond-meets-Tora Bora-ish, but sometimes the truth is stranger than fiction. It also raises questions as to why, if these things are true, China is lax on border control and keeping gang activity in check. I have previously ventured that software bandits are elusive, but I had...
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BMW on Beating Toyota & Co.

♠ Posted by Emmanuel in , at 7/27/2007 02:43:00 PM
TIME has a fine article on how Germany's Bayerische Motoren Werke (BMW), maker of luxury cars coveted the world over, is finding ways to compete with the Japanese automotive steamroller led by Toyota. The headwinds blowing against Beemer are great, especially a strong euro compared to a weak yen. Alongside changes in governance that have allowed German firms like BMW to act more "neoliberally" (pardon) in dealing with labor and the like, BMW has also invested in making its production process handle a higher level of customization to meet clients' desires. BMW sacrifices sheer efficiency in terms of production output in exchange...
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US Nat'l Security...or Protectionism?

♠ Posted by Emmanuel in , at 7/27/2007 01:59:00 PM
What we have here is yet another American effort to slow the inevitable: Given that America still continues to rack up massive current account deficits year in and year out, it is inevitable that foreigners will demand better than the "lousy" returns they get from American debt instruments according to Nouriel Roubini. Here is his commentary on foreigners buying equity stakes in US firms from the time when Chinese CNOOC was prevented from buying Unocal on, you guessed it, security grounds. The title says it all: "With the US current account deficit close to a trillion dollars of course foreigners will soon own most of the US capital stock":The current political saga and debate about the purchase by a Dubai-based company of the management of six US ports misses the most crucial point: with a US current account deficit running towards $900b this year and probably above one trillion $ next year, in a matter of a few years foreigners may end up owning most of the U.S. capital stocks:...
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World's Cheapest Laptop at $150?

♠ Posted by Emmanuel in at 7/26/2007 06:26:00 PM
First things first: Let me start by noting that the long-awaited One Laptop Per Child (OLPC) computer is now entering production, some five years after the idea was first proposed according to BBC News. (Is it just for me or does the OLPC look a lot like the original iBook?) While I have some doubts over the financial viability of this project, there is no question that the intentions behind it are good and that it deserves to succeed despite its difficult gestation period.As I will explain a bit later though, it is not the world's cheapest lappie top as it hits the street priced initially at $175 (see the breakdown of the...
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Combating Software Counterfeiting

♠ Posted by Emmanuel in at 7/26/2007 05:28:00 PM
Here in the Far East, there too is a flood of pirated software from China and Taiwan. Visit street markets in Ho Chi Minh City, Bangkok, Jakarta, Kuala Lumpur, or Manila and you will see pirated software hawked rather openly. Before getting to the stories concerned, let me get two points across. First, it is often assumed that counterfeiters sell shoddy goods. When it comes to software, though, I demur. The problem with this assumption is that even software pirates are not immune to marketing considerations. If their wares constantly didn't work or fouled up users' computers, repeat customer purchases would not be forthcoming....
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China in Sudan: a Positive View

♠ Posted by Emmanuel in ,, at 7/25/2007 02:48:00 PM
Two Harvard scholars, Jason Qian and Anne Wu, have recently made an op-ed in the Boston Globe that is a lot more favorable in its outlook on China-Sudan ties in particular and China-Africa ties in general. In contrast to the "new imperialism" view I generally hold, they have one that veers towards "constructive engagement." I must admit that I am not really convinced by their arguments. For instance, there is no mention of the tied aid China seems intent on giving, but their arguments deserve to be heard nonetheless:Some in the West have recently begun referring to the 2008 Beijing Olympics as the "Genocide Olympics" because...
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Baum: "Imported Inflation" an Iffy Idea

♠ Posted by Emmanuel in , at 7/25/2007 02:25:00 PM
The always-provocative Caroline Baum, columnist for Bloomberg, has put her thoughts on the possibility of "imported inflation" to writing. She is skeptical of the idea, citing central banks' largely undiluted influence over the matter. The scenario which gets this story going is simple: China used to be a "deflationary" force of globalization as lower-cost products were being made there more and more to the benefit of price-conscious consumers. However, this trend seems to be fading as China "has gone over to the dark side" (her term, not mine) since prices of Chinese imports in the US have gone up in recent months. Whether due to a somewhat stronger yuan, less export-tax rebates, or higher raw material costs, China's goods are becoming costlier:For years globalization was touted as undisputed good news in terms of the low prices it delivered to consumers. It was unqualified bad news only if you happened to be the fellow who made the goods now being produced in China. ...
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